Supply Chain Contingency Plans Are A Must

It should come as no surprise to anyone involved in Global Supply Chain operations that the impact of Covid-19, makes the need for creating supply chain contingency plans an absolute must.

According to a recent survey from the Institute of Supply Management, 75% of respondent companies reported they experienced a disruption in their supply chains in some form or manner due to the Coronavirus and subsequent transportation restrictions.  

In another survey conducted by the MIT Center for Transportation and Logistics, only 16% of survey respondents stated their company had set up an Emergency Management Center to manage their supply chain disruptions. When asked if these companies thought the Coronavirus disruptions would change how their company operates their supply chains in the future, a third of respondents felt that their companies should have better risk management initiatives in place. 

Key elements of responses in these surveys documented that identifying and securing critical suppliers is critical, wherever those suppliers might be located.  Furthermore, it was important that key suppliers would have the ability to withstand future uncertainty.

Clearly supply chain executives will need to better understand all of the resources available to them, as well as entertain working in markets and with countries that are more stable that they may not have considered before.   

The real story behind these surveys and several others we have reviewed recently reveals that some businesses are apparently not taking supply chain disruptions seriously.  Perhaps they are confident, or in some cases over-confident, that their current supply chains are safe from disruptions today and will remain safe for the future.  Whatever the case may be, constant review, constant analysis and constant benchmarking supply chain partners should be on every company’s mind. 

As we see it, there are three key critical components for determining the extent of future supply chain disruptions and setting a framework for evaluating potential change management strategies to resolve any future disruptions should they occur.

1. Gap Analysis: How confident is the company that its current supply chain will remain stable for the short and long term?  How can it absolutely prove that point?  And, if it cannot prove its supply chain is sustainable for the short and long term, what does the company have to do NOW and in the immediate future to ensure its businesses survival?
2. Mapping the Journey Forward: Supply Chain executives and their “C” level executives MUST have a clear vision of what lies ahead.  What are the supply chain challenges the business will face today and in the future?  Are there any expected constraints now; will there be any constraints in the future, and if so, what steps must be taken to navigate through those constraints to ensure an un-disrupted supply chain.  

Companies must think of this as a crystal ball process.  While no one actually has a crystal ball to know exactly what’s going to happen, that should not stop businesses from thinking about every possible potential disruption that could actually occur.  It’s the only way to ensure continuity in supply chain operations and to be totally prepared for any eventuality.

1. Create a Compelling Vision for the Future: Businesses need to create a successful path to ensure their supply chain survival goals are constantly met.  The path must include various “what-if” scenarios based on analyzing rational business models and performing on-going evaluations to ensure every eventuality is considered.  

The death knell for any business is the lack of total buy-in from all the key stakeholders affected by any business disruption issue, and that includes supply chain disruptions.  Companies MUST align purpose, mindset, roles, strategies, and ultimate performance throughout their company to ensure it can make the necessary changes on the fly if it needs to.  

How is your company going to protect its supply chain from further disruptions?  We can’t just wait for 2020 to be over, that’s just not going to cut it!   

Visit our consulting page to learn more about the tools you need to create a successful path for supply chain survival.